Samsung Electronics Nears 100 Trillion Won Shareholder Return, US Long-Term Yields Rebound Despite Bessent Intervention

The KOSPI index rose more than 1.2% to 6937 points, surpassing the 6900 level. Foreigners net bought 369.5 billion won on the exchange and about 480 billion won in the futures market, driving the index higher. The KOSDAQ, by contrast, plunged more than 4.7%, falling to as low as 795 points intraday before narrowly defending the 800 level; foreigners sold on the KOSDAQ for a second straight day (roughly 230 billion won), and institutions also sold in both spot and futures. The won weakened to as low as 1381 per dollar.

A sell-side circuit breaker was triggered on the KOSDAQ again on the day. Panelists noted that circuit breakers have been triggered in both markets almost daily recently, with volatility so severe that some are calling the circuit-breaker mechanism itself into question. Funds concentrating into Samsung Electronics and SK Hynix also left the KOSDAQ relatively sidelined, and heavy program selling from the morning session, as Treasury yields retraced from the prior day's sharp rise, added further downward pressure.

The KOSPI 200 volatility index spiked to as high as 90 at one point before falling into the mid-50s, then fluctuating back up into the high-50s, remaining elevated overall. Analysts said this indicator would need to stabilize for foreign investors to meaningfully approach the Korean market while bearing less risk.

SK Hynix, having bought back more than 1 trillion won worth of its own shares the previous day, purchased an additional 650,000 shares on the day, rising more than 4% to touch the 1.75 million won level. The company has been disclosing its daily purchase volume via filings before 6 p.m. each evening, buying a fixed number of shares regardless of price — cited as a textbook example of dollar-cost-averaging buybacks. President Lee Jae-myung and Chairman Chey Tae-won reportedly discussed semiconductor investment during a private meeting.

Reports that Samsung Electronics is pursuing a 100 trillion won shareholder return program spread through domestic and international outlets including Bloomberg, Nikkei Asia, and Reuters. Rumors of a board meeting in the afternoon and a filing expected within the week also circulated in the market. Market sentiment leans toward dividends over share cancellations, a stance analysts attributed to financial-industrial separation regulations. If treasury shares are cancelled and outstanding share count falls, the stakes held by Samsung Life Insurance (8.5%) and Samsung Fire & Marine Insurance (about 2%) would automatically rise, potentially breaching the 10% threshold under the Financial Holding Companies Act — making dividends the preferred route to avoid the burden of forced divestiture.

On these expectations, Samsung Electronics preferred shares surged more than 8% to around 207,000 won, far outpacing the common shares (up more than 2.5% to around 278,000 won). This is because the dividend yield on lower-priced preferred shares is calculated higher for the same dividend amount; if the 100 trillion won return materializes, the dividend yield on preferred shares could exceed 10%.

Semiconductor export data was also released. Cumulative semiconductor exports for August 1-20 hit a record high for the period, alongside overall exports, with export unit prices for NAND, SSDs, and MCPs reaching record levels. DRAM export value rose 11% from the prior month, while NAND export value rose 80% and unit price rose more than roughly 70%. This has raised expectations that Samsung Electronics' third-quarter operating profit estimate (previously around 110 trillion won) may need to be revised upward, with speculation that if Apple, having belatedly joined the memory-buying rush, pays premium prices, results could significantly exceed market expectations.

Discussions continue on KOSDAQ system reforms — introducing a tiering system, delisting penny stocks, and market-cap-based delisting criteria — but the lack of a confirmed implementation timeline is instead fueling market wait-and-see sentiment. Authorities plan to divide the KOSDAQ into three tiers — Premium, Standard, and Management — and encourage inflows of foreign and institutional capital through indices and ETFs dedicated to the Premium tier, but announcement of specific criteria has been pushed back to as early as October or as late as November-December, with implementation targeted for next year.

This uncertainty is producing a polarized response. Investors are preemptively avoiding stocks likely to be classified into the Management tier, while stocks considered likely candidates for the Premium tier are being viewed as buy-the-dip opportunities ahead of related index and ETF launches — two opposite trends occurring simultaneously.

Panelists assessed that while the KOSPI is building a floor through companies' own shareholder-return actions (share cancellations, expanded dividends), the KOSDAQ's key variable for building a floor is government system reform. Investor confidence that 'buying at this level won't result in significant losses' is what generates market dynamism, and on the KOSDAQ, it is policymakers who must build that confidence. Still, some cited signs of policy gradually taking effect, such as the National Assembly's passage of a cosmetics industry promotion law and the growth of trillion-won-scale biotech policy funds.

US Treasury yields have continued rising recently amid supply-demand issues. In response, Treasury Secretary Bessent expanded long-bond buybacks (increasing the size from an initial $2 billion to more than $4 billion) to boost demand for Treasuries, and yields eased somewhat for a day. However, the 30-year yield rose again on the day, prompting assessments that the so-called 'Bessent effect' had ended within a single day. JPMorgan noted that the expanded buyback is unlikely to win market confidence and, since it does not address the underlying fiscal deficit (around 6% of GDP), risks actually pushing up the term premium.

Panelists identified three causes behind the recent Treasury yield turmoil. First, concerns over rising oil prices and inflation stemming from Middle East geopolitical instability; second, a structure in which massive capital expenditure by AI companies has driven large-scale corporate bond issuance that competes with the Treasury market; and third, US national debt and fiscal deficits exceeding $40 trillion. Of these, only the third — the fiscal issue — is something the government can directly control, and Bessent's expanded buyback was interpreted as an attempt to address this.

In a CNBC interview, Secretary Bessent expressed confidence, saying he possesses asymmetric information the market lacks, and signaled he would announce a structural plan on fiscal issues early next week. Analysts said the market would need to see a credible message committing to fundamentally controlling national debt and the fiscal deficit, along with a concrete 'twist'-style plan shifting the maturity structure of Treasury issuance toward shorter-term securities, to be convinced.

Panelists noted that if such measures fail to bring yields down, the next lever could be a corporate tax hike. This would reverse the fiscal deficit expansion caused by the first Trump administration's tax cuts and tariff refunds; raising corporate taxes on profits excluding investment could produce a clear deficit-reduction effect and, in turn, lead to lower yields. However, this is likely to gain traction only after the November midterm elections, some observed.

In the same vein, Walmart's earnings release also weighed on US stocks on the day. US same-store sales growth hit its lowest level in six years, and next-quarter earnings-per-share guidance also fell short of market expectations. Excluding the one-time margin boost from tariff refunds, the results confirmed a genuine slowdown in consumption — a data point also linked to future US interest rate policy. Meanwhile, a stronger preference for safe assets pushed gold to around $4,590 per ounce and Bitcoin to $74,700 (surpassing 100 million won), an unusual pattern of both risk assets and safe-haven assets rising simultaneously.

President Trump summoned crypto industry CEOs and urged them to speed passage of the CLARITY Act. The bill, which would establish a clear regulatory framework for crypto assets, has been under discussion since the start of the administration but has stalled for more than a year over disputes about which agency — the Financial Services Commission, the securities regulator, or others — would oversee issuers.

Analysts said the push to expedite the bill at this juncture reflects a strategy to secure Treasury demand. Stablecoins must always redeem one coin for one dollar deposited, requiring issuers to hold reserves in safe assets such as US Treasuries to maintain trust. In other words, as the stablecoin market grows, it automatically generates new buying demand for Treasuries.

Panelists interpreted this as the US government's attempt to solve the fundamental problem in the Treasury market — who will keep buying an ever-growing supply of debt. Following the Treasury's buybacks and pressure on financial institutions to hold Treasuries, this represents an attempt to cultivate a new class of buyers via stablecoins. They also noted that passage of the CLARITY Act would give momentum to follow-on legislation such as the GENIUS Act related to stablecoins.

In this process, some observed that governments and financial institutions in various countries, including Korea, could face pressure to buy US Treasuries. Korea's Treasury holdings are relatively low relative to the size of its economy, and given that the semiconductor sector alone paid more than 70 trillion won in corporate taxes in the first half, some suggested that investing a portion of that in US Treasuries could give Korea leverage in its relations with the US. However, others cautioned restraint, recalling Trump's past pressure to buy 'century bonds with no maturity,' and noting that the US, as shown by its past unilateral abandonment of the gold standard, is a counterpart that can change the rules at any time.

An exclusive report emerged that SK Hynix plans to build a semiconductor plant in Miyagi Prefecture, Japan. The report was fairly specific, even noting that Chairman Chey Tae-won had visited the site, but subsequent reports quoting the company's denial followed, leaving the matter unconfirmed.

Lee Kwang-soo stated clearly that he 'personally opposes' this. While Japan has strengths in semiconductor materials, parts, and equipment, and generous government and local support, making the investment conditions themselves not bad, he argued there is no compelling reason to choose Japan given the precedent of Japan's past export restrictions on semiconductor materials triggering a Korea-Japan dispute, and given that semiconductors are now a national security and strategic asset on which the country's survival depends.

He also pointed out that over the past three years, as Taiwan has benefited from geopolitical instability, the resulting spillover benefits have increasingly flowed not to Korea but to Japan. At a time when Korea needs to reclaim its position as the center of Asia's semiconductor industry, he speculated whether Chairman Chey Tae-won's longstanding personal interest in Korea-Japan economic cooperation might be behind this report. He also noted the possibility that such concerns were raised during the prior day's meeting with President Lee Jae-myung, expressing hope that SK Hynix would place greater weight on domestic investment.